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Form 5405 Repayment of the Credit Due to Breaking the Contract

If you claimed the First-time Homebuyer Credit, there are certain situations (e.g. if the home ceases to be your main residence within a three-year period following the date of purchase) in which you may need to repay the credit in full.

Any amount calculated to be repaid will appear on Line 59b of IRS Form 1040. This will either reduce the refund on the return (the refund may become an amount due, depending on the repayment amount) or increase the amount paid.

If the credit was originally claimed on a joint return, each spouse is treated as having been allowed half of the credit for purposes of repaying the credit. Thus, two Forms 5405 will be produced (and printed with the return) if repaying the credit on a joint return.

Information regarding the Homebuyer Credit repayment can be entered or reviewed through the Other Credits section of the Federal Q&A.

To enter the repayment in to the TaxACT program:

From within your TaxACT return (Online or Desktop), click on the Federal Q&A tab

Click Taxes to expand the category and then click Repayment of first-time homebuyer credit

Click Yes and the program will proceed with the interview questions for you to enter or review the appropriate information